Probate Q&A Series

How to Access Life Insurance Proceeds for a Minor Beneficiary in North Carolina Probate

Detailed Answer

When a minor inherits life insurance proceeds in North Carolina, the insurance company cannot pay those funds directly to the child. State law requires that an adult take legal responsibility for managing the proceeds until the minor reaches the age of majority. In North Carolina, you typically use a guardianship of the estate to collect and hold the funds on behalf of the minor.

Here is how the process works under North Carolina law:

  1. Confirm the Beneficiary Designation. Review the life insurance policy and beneficiary designation form. Make sure the minor is named directly, not through the estate or a trust. If the policy names a parent or other adult as beneficiary, the proceeds will go to that person without probate involvement.
  2. Provide Proof of Insured’s Death. Submit a certified copy of the death certificate to the insurance carrier along with a claim form. The insurer will review the paperwork and confirm the minor’s status.
  3. Arrange a Guardianship of the Estate. Under N.C. Gen. Stat. § 35A-1201 et seq. (Guardianship for Minors), an adult must petition the clerk of superior court in the county where the minor lives to be appointed guardian of the minor’s estate. This process gives the guardian legal authority to receive and manage the insurance proceeds.
  4. Post a Bond and Obtain Letters. The court will require the guardian to post a bond to protect the minor’s funds. After approval, the clerk issues letters of guardianship that you present to the insurer as proof of your authority.
  5. Collect the Proceeds. Submit certified letters of guardianship to the insurance company. The insurer will then release the proceeds to the guardian, who must deposit the funds into a separate account in the minor’s name.
  6. Manage and Protect the Funds. As guardian of the estate, you must manage investments prudently and keep accurate records. Under court supervision, you file periodic accountings until the minor turns 18.
  7. Distribute at Majority. When the minor reaches 18, the guardian petitions the court to close the guardianship and distribute the remaining funds to the now-major beneficiary.

If the proceeds are small, the insurer may allow an alternative to a full guardianship. Some companies follow a simplified procedure for payments under a statutory threshold. Contact your insurer to see if aiding statutes apply.

Key Steps to Secure Life Insurance Proceeds for a Minor

  • Review the life insurance policy to verify the minor’s beneficiary status.
  • File a claim with the insurance company and submit the death certificate.
  • Petition the clerk of superior court for appointment as guardian of the minor’s estate (N.C. Gen. Stat. § 35A-1201 et seq.).
  • Post any required bond and obtain letters of guardianship from the court.
  • Present letters of guardianship to the insurer to collect the proceeds.
  • Open a segregated account for the minor’s funds and manage them under court supervision.
  • File annual accountings and seek court approval for major transactions.
  • Request final distribution when the minor turns 18 to close the guardianship.

Conclusion and Call to Action

Accessing life insurance proceeds for a minor requires careful adherence to North Carolina’s guardianship statutes. You must secure court appointment, manage the funds responsibly, and follow all reporting requirements. Pierce Law Group’s probate attorneys guide families through each step to ensure minors receive their benefits safely and on time.

Ready to protect your child’s inheritance? Contact Pierce Law Group today. Email us at intake@piercelaw.com or call (919) 341-7055 to schedule a consultation.